Among the donors spotted at the conference on Tuesday, the second day of the three-day gathering, were former Stride Rite chairman Arnold Hiatt, hedge fund financier Donald Sussman, electronics pioneer Bill Budinger, real estate developer Wayne Jordan and Suzanne Hess, the wife of real estate mogul Lawrence Hess.

There was no sign of some of the deepest-pocketed Democracy Alliance members, such as tech entrepreneur Tim Gill, insurance magnate Peter Lewis, or billionaire financier George Soros, though Michael Vachon, a Soros representative, did attend.

The conference itself featured mostly big picture analyses of the midterm elections and their predicted impact on the donors’ favored policy causes,rather than strategic planning for the 2012 elections, sources told POLITICO. And – despite the tens of millions of dollars in independent advertisements aired in 2010 by GOP allies attacking Democratic candidates – Democracy Alliance is not formally recommending its donors contribute to any outside groups that focus primarily on election advertising.

Indeed, despite that fact that Democrats were outspent by outside groups on electoral advertising in the 2010 midterms by a big margin, they’re still divided on the question of the right approach to take leading up to 2012. One of the reasons is that the Democracy Alliance was founded in 2005 in the wake of an election in which outside left-leaning groups spent heavily and still lost the presidency. The idea was to take a new approach that would challenge the right’s “intellectual infrastructure” — think tanks like the Cato Institute, the American Enterprise Institute and the Heritage Foundation — by creating institutions like the Center for American Progress to influence policy and media debates.

Now that they’ve been outgunned on the airwaves and trounced at the ballot box, some donors are getting restless and looking to create a political spending outfit to rival the network of right wing groups that revolve around American Crossroads and political operative Karl Rove. The meeting ended without any resolution to direct spending through any new group of this nature.

Not surprisingly, some of the founders of new liberal outside spending outfits, like Jim Jordan, who helped run the group Commonsense Ten, are firmly in camp one. But Michael Vachon, an adviser to wealthy Democratic donor George Soros, thinks liberals should stick to working toward campaign finance reform.

“I don’t believe that the left is going to be able to raise the kind of money that you see raised on the right because the donors on the right are ultimately acting in their own economic self interest,” Vachon told Politico. “So I don’t think that we should attempt to match the funding.”

Obviously, some sort of synthesis is in order here. After 2004, Vogel writes, a lot of Democratic donors turned to funding more permanent liberal intellectual institutions like the Center for American Progress (CAP). Those investments have served them well, but groups like CAP weren’t designed to fight electoral battles and didn’t run political advertising to counter conservative groups, like American Crossroads, which were set up with the explicit mission to elect candidates. Craig Varoga, a Democratic independent advertising operative, argues that it shouldn’t be viewed as an either/or situation:

“The lesson from 2004 is that media (paid advertising) without long-term infrastructure doesn’t work,” said Varoga, who runs a non-profit outfit called Patriot Majority that spent more than $5 million on ads supporting Senate Majority Leader Harry Reid’s successful reelection campaign in Nevada. “And the lesson from 2010 is that long-term infrastructure without media is also a losing recipe,” he said.

It also appears, however, that Republicans have outmaneuvered their Democratic counterparts since the Citizens United decision. They have taken advantage of Democratic broadsides against the ruling, which have inevitably had an effect on the attitudes of Democratic donors.

Mr. Obama devoted one of his weekly radio addresses this month to the effect he said untamed special interests were having on the midterm election. “We can see for ourselves how destructive to our democracy this can become,” he said. “We see it in the flood of deceptive attack ads sponsored by special interests using front groups with misleading names.”

Several Democratic strategists said the White House’s denunciations had made entreaties to prospective donors trickier.

“You can complain about the rules, or you can respond to them and fight back against the people who welcome those rule changes,” said Craig Varoga, who heads up Patriot Majority, which has been supporting Senator Harry Reid in Nevada and has been one of the most active Democratic-leaning outside groups.

Indeed, attacking the result of Citizens United — the flow of unlimited sums of money from corporations into express advocacy efforts — doesn’t seem like the ideal pitch to big Democratic donors. Democrats may claim the moral high ground (and public opinion) on the issue, but it would seem to dampen their ability to compete. No wonder George Soros and others say they’re focusing more on progressive policy issues than on direct election spending.

Sen. Olympia Snowe (R-Maine), one of two Republicans targeted to cross the aisle for the DISCLOSE Act. (Pete Marovich/ZUMApress.com)

Update: Today, the Senate voted on the DISCLOSE Act — which would have required organizations involved in political campaigning to disclose the identity of large donors and would have barred foreign corporations, large government contractors, and TARP recipients from making political expenditures.

[Congress1] Public interest groups and Democratic Senate staffs had pressured Maine Republicans Olympia Snowe and Susan Collins, the most centrist members of the GOP, to support the bill. But neither ended up crossing the aisle.

The notoriety of Citizens United has ensured that relatively small campaign finance bills like the DISCLOSE Act are getting substantial attention from Senators — and even the president. But it also means the much-needed reforms have become puppets in political theater, making it all the more difficult for both sides to negotiate a rational fix to a system of political disclosure that is clearly broken.

Reformers believe right is on their side. Yesterday morning, local affiliates of U.S. PIRG — the federation of state public interest research groups — hosted an event in Bangor to demonstrate local support for passage. PIRG organizers, the Maine League of Voters and a number of small businesses gathered and argued for the legislation. For months, business groups have lobbied Snowe and Collins, and demonstrated Maine residents’ support for more rigorous disclosure for political spending.

Transparency and good governance groups’ newfound, obsessive focus on Snowe and Collins extends beyond the Senators’ moderate stance on other issues and their relatively endangered status as New England Republicans, however, explains Lisa Gilbert, democracy advocate at U.S. PIRG.

“Both were very involved in the McCain-Feingold Bipartisan Campaign Reform Act, working closely with Feingold — particularly Senator Snowe,” notes Gilbert. “It’s not a stretch to say they’d be involved in legislation like this.”

Moreover, Maine is a state that’s famous for its strict campaign finance laws and its citizens who tend to like them. “I think it is fair to say that Maine is often ahead of the game when it comes to clean money and ethics issues,” Gilbert adds. “It’s one of the only states that has a system of public financing in place and it has a history of being independent and pushing for transparency in government so it can make the right decision. That’s generally been reflected in state policy and reflected in their choice of Senators.”

But in Washington yesterday, debate centered on the idea of disclosure more broadly — and vocally. Democrats accused Republicans of reneging on their previous commitment to the cause while Republicans claimed Democrats were using it as cover to distort the outcome of the upcoming midterm elections.

Sen. Richard Durbin (D-Ill.) conducted a portion of his floor speech as a trivia game, asking listeners to guess the senator who made the following comment.

“What we ought to have is disclosure. I think groups should have the right to run those ads but they ought to be disclosed and they ought to be accurate, end of quote. Who said that?” Durbin asked his fellow senators. “The Senator from Kentucky who has just come to the floor — the minority leader — in the context of the McCain-Feingold campaign finance bill in 2002.”

He went on to call out Sen. Jeff Sessions (R-Ala.) and Sen. John Cornyn (R-Texas) for their previous support for the idea of disclosure as well.

Sen. Mitch McConnell (R-Ky.), for his part, focused entirely on accusing Democrats of meddling before the election. The Minority Leader coined a new name for the bill — “an incumbency protection act for Democrats in Congress” — and argued that, “now, after spending the last year and a half enacting policies Americans don’t like, they want to prevent their opponents from criticizing what they’ve done…. They’re trying to rig the system to their advantage.”

Claims from Republicans like McConnell that the DISCLOSE Act is an attempt to sway the midterm elections to Democrats’ advantage were given a dose of reality by Sen. Charles Schumer (D-N.Y.) later in the day.

“We are willing to change the effective date to January 2011 so that it won’t apply to this November’s election,” Schumer said. “Even if we didn’t take this step, the reality is, we are late enough in the election cycle that the law could not realistically take effect in time for this fall. But to show we are willing to work with Republicans, we would offer this as an amendment if we can get onto the bill.”

But even though more than a month has lapsed since the last Senate vote on the DISCLOSE Act, the bill Democrats are trying to move today will look identical to the one that failed to overcome a GOP filibuster in July — indicating that actual progress in negotiations has stalled.

“Through this last period of time, we’ve been reaching out and offering to negotiate changes to the legislation to meet any objection that Republicans may have,” claims Gilbert, “and [Schumer’s office] has made it really clear that they’re willing to focus on disclosure and have it take effect next year, but no Republican Senator has stepped forward in a meaningful way to negotiate.”

RNC Chairman Michael Steele (ZUMA)

The “suggested amount” portion of the donation form is crossed out. There isn’t a box to check for no donation, so the would-be donor has simply drawn and filled in a new bubble and scrawled “NO.”

“What the hell happened in NY District 23?” writes the anonymous donor to an unrewarded Republican National Committee. “You guys supporting Dede Scozzafava?”

[GOP1] The form is one of many collected by blogger, columnist and TV pundit Michelle Malkin since the RNC chipped in for the doomed congressional campaign of Scozzafava, a moderate Republican who eventually withdrew from a November 2009 special election and helped Rep. Bill Owens (D-N.Y.) squeak past Conservative Party candidate Doug Hoffman. In the wake of Monday’s Daily Caller story on the RNC’s lavish spending, including a $1,923 check to the Voyeur West Hollywood nightclub — an embarrassment to RNC Chairman Michael Steele for which the offender, Allison Meyers, was fired, and her upcoming events postponed — Malkin put up another batch of defiled RNC donation forms, with graffiti like “Fire Steele. Hire Cheney. (Dick or Liz.) Then Get Back to Me.”

The Voyeur story dogged the RNC all week, especially after the committee pointed to outsized Democratic National Committee expenses as a distraction (giving the DNC an opportunity to take another whack at the juicier RNC tale) and after Politico noticed that a typo on one solicitation form sent donors to a phone sex line. But for many conservative activists, it only accelerated and amplified a revolt against the RNC that had been brewing for months. It’s given the growing number of conservative PACs and projects a new selling point to potential donors. And it’s emboldened the sizable number of loose-lipped Republican activists who are working to create new institutions outside of Steele’s purview.

“This nightclub story is absolutely awful,” said Eric Odom, a Tea Party activist and the chairman of Liberty First PAC, “but the RNC just came off of a meeting in Hawaii, and that was even worse. I don’t think there are conservatives who are going to turn on the RNC just because of this story. I think it’s the nail in the coffin.”

According to Odom — who famously denied Steele a speaking slot at the April 15, 2009 anti-tax Tea Party in Chicago (Steele, at the time, denied that he had wanted to speak) — donors to Liberty First PAC have been submitting RNC-bashing notes along with their checks. One out of ten donations via Paypal, said Odom, came with a message along the lines of “2009 was the last year I’ll donate to a party.”

Mark Skoda, the leader of the Memphis TEA Party who launched the Ensuring Liberty PAC at February’s National Tea Party Convention, told TWI that the troubles that had beset the RNC would be impossible in his group — and potential donors knew it.

“We’re not going to be buying first-class tickets,” said Skoda, who is convening the first meeting of Ensuring Liberty’s board next week. “There’ll be no big parties. We’re operating like a business. I used to work for FedEx — these things like vast overcharges didn’t happen.”

Skoda, who said he “felt bad” for Steele after hearing the Voyeur news, emphasized that Ensuring Liberty would be “a complement,” not a competitor, to the RNC. It would back Republican candidates, albeit after making sure they fit the PAC’s exacting standards and didn’t just have an “R” next to their names on the ballot. But other conservatives are less diplomatic. On Wednesday night, Family Research Council President Tony Perkins sent a blunt message to supporters: “Don’t give money to the RNC.” On Thursday afternoon, the Leadership Institute — whose president, Morton Blackwell, is an RNC committeeman – posted a Facebook message commenting favorably on the Perkins news. (Blackwell is out of the country and did not respond to requests for comment.)

The evidence of conservative donors taking their money elsewhere is hard to track. In the final quarter of 2009, for example, the most prominent competitors for conservatives’ donations pulled in modest amounts of money. Our Country Deserves Better PAC, the group behind the Tea Party Express, had only $161,174 in receipts. The Senate Conservatives Fund, Sen. Jim DeMint’s (R-S.C.) PAC to aid his hand-picked candidates, raised $238,189. By comparison, the RNC raised $22,295,310. But activists point to the RNC’s low cash-on-hand numbers to make their case.

“The bottom line is that Michael Steele never should have gotten this job in the first place,” said one exasperated conservative fundraiser. “Nothing that’s happening now should surprise anyone.”

That criticism has surfaced again and again as conservatives court donors for their projects. On Thursday, Jonathan Strong — the reporter whose initial Voyeur story started the latest stampede against the RNC – cobbled together the last few years’ worth of negative stories about Steele’s managerial and financial problems. They hadn’t been enough to push conservatives away from Steele when he ran for the U.S. Senate in 2006 or the RNC chairmanship in 2009. Indeed, in 2005, conservatives rallied around Steele when the Democratic Senatorial Campaign Committee hacked into the Senate candidate’s credit report to get the details on his personal bankruptcies.

Conservatives are no longer giving Steele a pass on those stories. The less faith small- and big-dollar donors have in the RNC, the more valuable they can be to other PACs, which are not being shy about soliciting their support.

“When I fly, I fly coach,” said David Bossie, the chairman of Citizens United and its political PAC, another competitor for small-dollar conservative donors. “We’re not lavish. If you donate to us, you know your money is going right back into the field to support conservative candidates, seeking out people who wouldn’t otherwise get support.”

The Susan B. Anthony List, the American Conservative Union’s PAC and Our Country Deserves Better can all point donors to their low-overheard campaigns in NY-23 or the Massachusetts special election for the U.S. Senate, contrasting those with the performance of the RNC.

The party committee is well aware of its predicament. “The press shop’s about as busy now as it was during the days that Sen. John McCain (R-Ariz.) suspended his presidential campaign,” groused one conservative strategist who’s worked with the RNC.

The problem for conservatives is that dividing their efforts, and nurturing mistrust in the RNC, might damage the GOP’s 2010 strategy even if competing groups are well funded.

“You’re seeing a lot of small donors, who in other times would be discovering the party committee, going to these PACs instead,” said Anthony Corrallo, a fellow at the Brookings Institution who studies campaign finance. “Large amounts of potential money that the RNC may have been able to attract are now going elsewhere. And you’d rather see money located in the parties — the RNC can do much more coordinated GOTV [get out the vote] and advertising.”

RNC defenders could point the detractors to the left’s experience with divided effort. In 2003, a team of big liberal donors that included George Soros and Peter Lewis founded America Coming Together, spending more than $10 million for GOTV. Because ACT couldn’t coordinate with the Democratic Party or John Kerry’s presidential bid, some of its efforts were wasted. And in 2007, the disbanded group paid a $750,000 fine to the FEC for fundraising violations.

It remains to be seen whether conservatives can avoid a similar fate.

As of November 15, the transition has raised $1,170,937.44 from 1,776 donors, for an average donation of $659.31. The contributions range in size from $5 to the $5,000 legal maximum.

According to the transition, it accepts donations only from individuals, and rejects any from corporations, labor unions, political action committees, registered federal lobbyists and registered foreign agents.

A quick review of the largest donations indicates many appear to come from lawyers and those working in the financial industry. This is not entirely surprising. According to OpenSecrets.org, lawyers and the financial industry were the second and fourth largest sources of contributions to the presidential campaign’s of both Obama and Sen. John McCain (‘retired’ was the largest.)

There are a few interesting donors. Eric Schmidt, CEO of Google, and William Daley, former commerce secretary, both are advisers to the transition and contributed the maximum.

However, the one that really jumped out was a $5,000 donation from George Lucas, of the San Rafael, Calif.-based Lucasfilm Ltd. — the director and producer of the “Star Wars” franchise.